Federal Reserve vs Congress: Lesser of Two Evils ?

I was invited to testify this week to the House Financial Services Committee about reform and regulation.

I politely demurred.

Quite bluntly, I didn’t see how speaking to Congress would matter one tiny bit. Its not like they seem to be paying much attention to witnesses, or have very much interest in figuring out what was the cause of the crisis. Besides, they seem to be beholden to those whose interests are to not fix the problems at hand.

While I have been critical of the Federal Reserve (especially the Greenspan years), my beef with them has been their judgment and decision-making process. Congress, on the other hand, is a whole different matter. Its not their judgment, but rather, the fact they are owned not by the American people, but by lobbyists, and corporate interests. They have become structurally deformed.

How weird is it for me, who spent so many pages blaming the Fed for much of the recent crisis, to find myself in a position of defending them from outside political pressure? The choice we face is the recent Fed regime of secrecy, nonfeasance, irresponsibility, and easy money — versus something possibly likely to be a whole lot worse.

To be found in “contempt of Congress” would require an improvement in opinion of them.

If the Fed has been a major source of problems, Congress is much worse. They were the great enablers of the crisis, readily corruptible, bought and paid for by the banking industry. Even AFTER THE CRISIS, the lobbyists seem to own the place. Thus, I fear Congress is the worse of two evils — lacking in objectivity, incapable of producing legitimate regulatory review.

If the Fed is Wall Street’s bitch, than Congress is the Street’s whore.

You can see why going to DC is probably a good way to get my ass thrown in jail. Most scenarios I envisioned end with me trying not to respond with a list of the campaign donations that were made to the congressional questioner. I pictured myself responding not to the “Senator from the great state of Texas,” but rather, to the “Senator representing the great state of AIG.”

In my mind, these back and forths all go badly. Visions of Jack Nicholson barking YOU CAN’T HANDLE THE TRUTH comes to mind. Or worse, Al Pacino yelling, I’M OUT OF ORDER? THIS WHOLE PLACE IS OUT OF ORDER!

I leave the great chamber — or rather, am led out — in cuffs.

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If anyone can give me a good reason to spend a day in DC testifying to Congress, I am all ears. I was unable to think of any; maybe the crowd has some special insight.